Teradyne draws momentum players

Teradyne has been trending higher, and the momentum players are stepping in today.

optionMONSTER's Heat Seeker monitoring system detected the purchase of more than 7,000 July 18 calls, most of which priced for $0.95 and $1. Volume was more than triple the previous open interest at the strike, showing that this is fresh buying.

Those long calls lock in the price where investors can buy shares in the maker of semiconductor-testing equipment. The options can generate some nice leverage in the event of a rally but will also become worthless if the stock declines or stops climbing.

The calls provide upside exposure at a much lower cost than owning the equity. (See our Education section for more on how options can be used to manage risk.)

TER is up 2.99 percent to $17.24 and is up 10 percent in the last three months. The stock has been gaining despite mixed earnings reports and is now attempting to hold support around the same level where it peaked in September. Some chart watchers may consider that a bullish setup.

The Heat Seeker also spotted buying in the July 16 calls for $1.60 to $1.64 on Feb. 1, and those contracts have now inflated to $2.

Total option volume is 9 times greater than average so far today, according to Heat Seeker. Calls outnumber puts by more than 500 to 1.